SBJ/May 2 - 8, 2005/SBJ In Depth

Ad buyers make their choices

Talk to a cable advertising executive and odds are you will hear the “one television world” mantra: People don’t watch cable or broadcast, they watch television.

But talk to ad agencies and they still buy either cable or broadcast, not simply “television.” No matter how blurred the lines, advertising is about segments: prime-time broadcast or cable, not prime-time television; national sports, regional sports, specific sports — not sports.

Everything else, though, is in play — from the ways viewers watch and networks sell to the mix needed to make a campaign work in the on-demand media age.

The result: a shrinking, but still vital, center stage for broadcasters juxtaposed against the increasing awareness that it takes many types of media to capture the attention of today’s consumer.

The winners: cable, which continues to siphon viewership and dollars from broadcast; what some like to call “passionate” programming — shows or events that bring fans, not just viewers; and anything that moves “beyond the 30 [-second spot],” as Turner Broadcasting’s David Levy dubbed his upfront presentation this year.

“Cable continues to make inroads in terms of garnering increased share of budgets,” said Bob Flood, executive vice president and director of electronic media for Optimedia. Still, he sees great benefits with the broadcast nets, adding, “They deliver very specific opportunities for advertisers in terms of their immediate reach potential.”

Sports programming crosses every category, as underscored by the recent NFL deals with NBC Universal and Disney. NBC Universal wanted a consistent major prime-time draw for NBC but only if it came with the programming flexibility to take advantage of the late-season interest that sustains passion.

Flush with prime-time programming success at ABC, Disney was willing to give up broadcast football; ESPN wanted “Monday Night Football” but had to have a package that included a wide array of other rights that fit into the sports net’s multimedia scheme. The NFL wanted serious money; ESPN with its dual-revenue stream could afford to pay more than ABC. The deals, effective in fall 2006, deliver on all counts.

Before Ed Erhardt, president of customer marketing and sales for ESPN/ABC Sports, begins to sell “MNF” on ESPN, though, he has the 2005 upfront season to make it through — including a 2006 Super Bowl; Erhardt is in upfronts from May through October.

His pitch for the Super Bowl, which extends beyond the game to pre- and postgame on ABC and significant programming on ESPN: “Be a Super Bowl marketer — not an advertiser in the Super Bowl.” He said, “That makes a lot of sense if you’re us. The point is when we come to market we come to market in a multimedia way.”

And a multinetwork way. The ability to package ABC, ESPN and the other Disney networks offers the potential for a variety of cross-network deals. Or Erhardt can go deep and vertical with ESPN’s networks, ESPN Mobile, ESPN broadband and ESPN The Magazine.

Spreading out ad dollars

Traditionally the spring upfront has involved broadcast prime-time programming, followed by a cable upfront. Now the prime-time upfront is increasingly more of an overall upfront covering broadcast and cable buys, particularly for top-tier cable networks.

“You have a pattern that has been continuing,” said Levy, president of Turner Ad Sales and Turner Sports. “Cable is only going to eat at the broadcast network’s pie. We’re getting closer to the finish line of a ‘one television world’ where advertisers won’t have cable and broadcast budgets any more — they will have television budgets.”

Cable channels try to convince advertisers that their campaigns could be more efficient by shifting some of their broadcast dollars to cable.
He puts sports at the forefront of the shift. “Sports has lived almost outside of this world for quite some time,” Levy said. “There really is no gap between CPMs [cost per thousand viewers] on broadcast networks and cable. My NBA isn’t any less expensive than ABC, maybe more expensive. The same Shaq that plays on ABC is playing on TNT.” Levy contends the programming is the same but the cost per rating may be lower.

But there’s still a CPM disparity between broadcast and cable in most categories. Some cable sales teams mix that disparity with the increased movement of viewers to cable for a sales pitch aimed at delivering similar or more bang for less buck.

For instance, when Levy and his sales team meet with advertisers and media buyers, they can pull out a presentation of Nielsen data about actual ads that an advertiser has run and, based on that, show how a particular campaign could be carried out more efficiently by substituting some of the broadcast for cable and shifting some of the savings to other areas. Levy would not provide specific examples of advertisers who have bought in to that approach.

For Optimedia’s Flood, media planning “is like playing three-dimensional chess now.” Targeting the right demographic on the right show — a crap shoot in the most predictable seasons — is just part of the video ad game. Video on demand, DVR, broadband, online and mobile are all part of the mix now.

“Media consumption is one variable,” Flood said. “The other variable is where do these media impact people in their purchase decisions? If you’re buying an auto, one of the first stops is the Internet. … You have to look at the total communications effort against prospects. The landscape has changed so significantly now; people have a personal relationship with the media they use as their primary source.”

That personal relationship can be tapped in a variety of ways, said Dave Cassaro, president of Comcast Network Advertising Sales, which handles ad sales for networks including E!, The Golf Channel, Style and Outdoor Life Network. “What we afford marketers are targeted opportunities to reach passionate people — people who are passionate about style, golf, outdoor sports, video games, Asian culture.”

Cassaro offers Mercedes-Benz as an example. “Obviously if you’re selling Mercedes-Benz, you can find that person watching E!, The Golf Channel and Style. You may not find them watching ‘Survivor’ on CBS.” His pitch: Finding them via “Survivor” would be wasteful because of the large cost of ad time to reach potential buyers watching the show.

See related data:

Cable takes a bigger slice of the pie

Turnkey Sports Poll

Sports advertising revenue by programming type

Ratings trends among major sports properties
John West, senior vice president of ad sales for Outdoor Life Network, can help Cassaro meet the needs of a national advertiser with a cross-net campaign, but he also offers the niche fit. “We will work together and go together as a big group where it makes sense for them; we’ll split up where it makes sense for them as well,” he said. “We work together as a team to cultivate the business for the necessary networks.”

It sounds like West, who recalls when OLN was sold primarily as a stand-alone niche network, prefers the mix. “The purpose of why we formed that group was to create that ability to take a portfolio to the marketplace. … It’s an opportunity to deal with marketers on a whole new level.”

Guy Souza was employee No. 4 at USA Network, signing on before the nascent net even had a Manhattan office for ad sales. Now he sells sports across six Fox cable networks ranging from FX and Speed to eight hours a day of Fox Sports Net.

Souza doesn’t see his role as moving money from broadcast to cable. His job is to sell across the Fox environment. Souza said, “We are not reliant on live sports where many times the leagues restrict use; we can bring value to the advertisers with all kinds of integrated programs.”

One measure of how things have changed: When Souza started at Fox 10 years ago, the routine was to sell 50 percent at upfronts. Now, depending on the brand, Fox Cable sells 70 percent. The demand for cable alters the atmosphere, Souza said. “What’s happened as sellouts have increased there have been much more mature marketplaces. There have been many examples where some of the cable networks have shut down their sales based on the demand.”

While Souza sells national for the Fox regional sports nets, don’t ask Cassaro about Comcast’s growing regional sports group. That’s the province of Comcast Spotlight.

By the numbers

“What you’re seeing is a national television marketplace that has been correcting to follow the viewers,” said Sean Cunningham, president of the Cable Advertising Bureau. “Last year’s cable upfront, when all the smoke had cleared, $6.2 billion went to cable, up from $5.3 billion in the previous upfront; we saw about a 17 percent lift. The previous was roughly $4.6 billion.”

This year, the viewership numbers continue to move cable’s way. “We can see now 29 weeks into the current 2004-05 TV season, cable growth and network declension is identical to where it was a year ago,” Cunningham said.

Outdoor Life Network still pitches itself as a niche fit for advertisers, but also partners with other networks to provide a portfolio that better matches demographics that buyers want.
Even the cable cheerleader-in-chief knows marketers want a mix. “If there was a consistent characterization after the [2004] upfront, it was that new money into the market seems to have disproportionately gone to cable,” Cunningham said.

ESPN’s Erhardt expects a good showing from sports when the dust clears this year. Not only can sports programming reach the right male demographics, it can do so in prime time and, he adds, “It’s safe, reliable and TiVo-effective.”

The bulk of the attention — and the money — goes to cable and broadcast but other ways of reaching consumers are picking up steam. “Advertisers are looking for more value, ‘What can you create for us that feels like we can immerse yourselves in your space?’,” Souza said. “Not what used to be added value but what can you do beyond the 30-second commercial.”

Turner’s Levy said advertisers are looking for extensions off the linear networks — VOD, broadband, wireless. “However, the universe is so small the money’s not so great. Everybody wants to see, ‘Does it add to my results?’”

This is where networks can get creative. For instance, Turner doesn’t hold any NBA clip licensing but TNT can push its own studio show via cell phones. Some Nokia handset owners can watch an additional two or three minutes of Kenny, Charles and EJ.

The splintering of rights also makes exclusivity more important for networks like TNT, which negotiated an exclusive Thursday night window with the NBA. “Exclusive helps to maintain and grow your ratings if possible,” Levy said. “What happens with satellite radio, what happens with broadband, with wireless? Where else can you get sports information?

At Optimedia, Flood bought time on “Big Brother’s” daily Internet show for T-Mobile. Now he’s looking for other ways to put his clients’ messages across, particularly at the point of origin when video or music is downloaded, on program guides and playlists. “Those interfaces, that’s what you want to own — you’re the gatekeeper then.”

He added, “People have far more control over their consumption than ever before.”

Staci Kramer is a writer in Missouri.

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